Just Walk Away….

Everyone should be willing to walk away from an offer or contract.  As a broker, I want to help clients when they need to agree or when they need to move on.  Being an advocate for a client sometimes means reinforcing a realistic view or speaking, when going forward may not be in their best interest.

Offers should always have a budget.  It may mean pre-qualifying for a loan or establishing a number you are unwilling to exceed. Regardless, be willing to walk away if the seller or buyer does not need your price.  Knowing when to walk away can result in better prices and terms.  When you feel the property is the only choice for you , poor decisions are more likely.

Inspections can destroy sale.  Watching a sale fall apart over an overzealous description of property condition, can turn purchase anxiety into something more.   Discussing the limits of an inspection and talking about realistic results of an inspection, go a long way toward calming a buyer or seller, looking unprepared for a negative result.  A common problem is an inspection showing too much minor detail and minor flaws, considered more cosmetic than defect.  Inspectors can describe a property, but, occasionally, you see something unusual.  Years ago, I spent several hours explaining the difference in changes to code and a defect requiring owner repair.  The inspector they chose, specialized in new construction and his entire focus was “Does this home meet current building code?”.   Building codes change and a 1980’s home will not meet 2017 codes.  The buyer, reading through the report, became convinced/determined an older home, in excellent condition, needed extensive work to meet current code.   Unfortunately, the contract and repair addenda, do not normally cover code updates….only non-working or damaged features.  That said, all inspections uncovering a significant defect, should be cause for discussion.  Some contracts offer pre-determined repair amounts and some only offer the right to end the agreement.  If significant and unknown before the inspection, the parties will generally meet to discuss.  If significant enough and if a seller is unwilling to offset the defect it may be time to consider walking away .

Unrealistic people make sales difficult.  Sometimes the buyer expects to negotiate far below a realistic range.   I try to reign in unrealistic expectations with statistics on the market.  Currently, the average percentage of sale to list is in the high 90’s, but knowing list sell percentagethis sometimes changes the expectation.  The most difficult year for this kind of unrealistic came just after the recovery.  As short sales disappeared and inventory dropped, most buyers thought we were still in a market with “steals”.  There are always good buys, but sometimes a buyer remains unrealistic through good and bad markets.   These occasional difficult buyers never make a realistic offer.  Knowing not to chase a sale, as an Owner, with no chance of an agreement,  preserves your ability to price in the future , but it also saves time and energy for your agent.  Sometimes, it serves no useful purpose to reply to an offer and sometimes broadcasts a willingness to drop in price for an unworkable Buyer.

Failure to permit work or construction is another common problem.  See this link for Fernandina’s online search tool.  This is not a substitute for a thorough closing agent, but

permits

Typical Kinds of Permits Shown

it can raise red flags if you see recent work and no accompanying permit.  Occasionally you see a home with extensive missing permits.  If this work is not permitted or permits cannot be closed,  you need to make a decision.  The work and responsibility for a missing permit may become your liability, if you choose to move forward with a sale.

Appraisals can kill sales.  Based on past data, numbers can sometimes be lower than the market will bear.  Many buyers are unwilling to move forward when an appraisal falls below the purchase price.  In the past few years several results came in low for me and, more often than not, it had more to do with limited comparable sales than value.   Keep in mind the market.  Some areas are increasing and the limited comparables mean an appraiser’s opinion is based on limited data.    That said, a big difference in contract and appraisal can mean the end of a sale.

Termites are common in Florida.  Generally, most homeowners carry a bond on structures.   Occasionally a property does not have a bond and has extensive damage uncovered during inspections.  When this is the case it may be reasonable to have a structural damage to the property.  If the damage is too severe and cannot be repaired and if the homeowner is unwilling to correct the issue.

Flood zones are almost certainly changing in August, with new FEMA maps going into effect.  Elevation can become an issue, if flood insurance or a high premium is required for a property previously built at a required elevation.   While not anyone’s fault, building a home below the required elevation can significantly increase your cost to insure.  Consult with your insurance agent, verify the flood zones early and consider costs.

Undisclosed defects are less common, but can be more serious if an owner knows and chooses not to disclose.  Agents are also obligated to disclose known to defects.  During the contract period, hidden defects can be an issue, but becoming aware of a hidden defect after the sale is a much different issue.  An attorney can explain your rights and help you determine your next course of action.  Knowing your rights, and being willing to walk away, if needed, is important.  It is far easier to discuss or resolve issues before actually closing on a property.

Title Defects are very common .  Simple defects can be corrected prior to closing, but an underwriter, lender and your attorney, might insist on resolution before closing.  Some issues cannot be corrected within a reasonable time.   I make an effort to ask questions before closing and am usually aware of possible issues.   Self-prepared quit claim deeds sometimes raise a red flag.  One potential client wanted me to look at a site last year.  While looking, they started telling me about the purchase…cash sale, quit claim deed, not closed at an attorney’s office or title company.   To make a long story short, the deed appeared to have only one owner’s name, an unrecorded easement, a big one, was running through the property, another neighbor had a driveway on an actual recorded common easement, but didn’t want to share.   The deed even added in a description of property another neighbor was using.  I gave him names of three attorneys and two surveyors I use, along with an estimate of value assuming everyone is cooperative.

I always tell buyers to visit a neighborhood after work on a weekend or at different times during a day.  Knowing how many cars park outside the home were trying to be a few of your neighbors can become important over the years.  The annoying neighbor doing

 

woodworking daily, with exotic pets or throwing parties every weekend, may not be your ideal.

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Ok, this isn’t a legal pet for your neighbor in Florida, but loud or aggressive animals do not make a happy neighborly relationship. 

Occasionally the subdivision or neighborhood includes excessive covenants or deed restrictions.  These restrictions can occasionally become a burden or a deal breaker for a buyer.  One of the most annoying restrictions in a subdivision included a specific “non-standard” fence height.  The height had nothing to do with quality, but meant every homeowner was expected to cut a standard fence down to size or buy more expensive custom-made fencing.  I include,  in almost all contracts, a feasibility or due diligence period to review everything, including deed restrictions.   ARB members, with an overinflated sense of their importance, can be annoying.  Restrictions and architectural review sound good when you own an existing home, but can be an issue if neighbors try to over control the late arrivals.  Meeting nearby owners can help.

Surveys sometimes show encroachments and sometimes the dimensions of the property are much different from the description in multiple listing.  A property without an available survey is usually the problem  The property appraiser is much more accurate today, but is not a substitute for a survey.  That said, even a survey can have errors.  Last year, I sold a lot with a portion deeded for easement.  The depth was 20 feet less than a platted size and, luckily for me, I furnished the buyer and their agent with an old survey and the accurate measurement.  A new survey missed the change and showed the total depth, including the deeded portion.  I called everyone to be sure they understood the new survey was in error, but errors are usually in reverse.  A lot with one description is suddenly a little smaller or subject to a previously undisclosed easement.  Once, at closing, a survey arrived showing a restrictive easement.   None of us knew before the

Walking away might be the only option, but always be aware of your rights and obligations under an agreement.   I’ve been a broker for 30+ years and I use attorneys when I’m in doubt.   Walking away before signing a contract is reasonable for dozens of reasons.   Just consider consulting an attorney if you want to be certain of the meaning, have a concern about proper notice to end an agreement or want to be sure you aren’t creating an unintended liability.

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